Under pressure: Mike Coupe needs to come up with a new plan to satisfy investors.
Photograph: Sarah Lee/The Guardian

Higher prices. Lower quality of service. A worse shopping experience. The Competition and Markets Authority could hardly have been more damning as it blocked the proposed merger between Sainsbury’s and Asda.

In truth, the decision was not a surprise after the CMA published a preliminary report in February. The competition watchdog simply did not buy the argument from the two supermarket chains that there would be economies of scale from a merger that would generate lower prices for consumers.

The CMA was right to be sceptical about the claims made over a £1bn windfall for shoppers. A basic rule of economics is that the smaller the number of suppliers, the greater the opportunity to exploit market power at the expense of customers.

Asda and Sainsbury’s said food retailing was already hyper-competitive due to the arrival in the UK of Aldi and Lidl, and the ambitions of Amazon in the sector. But the CMA was having none of it, rejecting the idea that the proposed merger would help the squeezed middle against the discounters on the one hand and upmarket brands on the other.

Nor did it have any truck with the suggestion it might give the deal the go-ahead if Asda and Sainsbury’s agreed to sell some of their stores. Using the bluntest of language, the CMA said the only effective way to address its concerns was to block the deal.

There was no immediate sign, despite rumours of a private-equity sale, that the US retailer Walmart would dispose of Asda in a kneejerk reaction to the collapse of the merger. But pressure on Sainsbury’s and its chief executive, Mike Coupe, has certainly intensified.

Why? Because Coupe made a catastrophic misjudgment in assuming the CMA would wave the deal through. Because he compounded the error by allowing himself to be filmed singing “We‘re in the Money” on the day the merger plan was announced. And because, judging by the fall in Sainsbury’s shares, taking them close to a 30-year low, investors don’t think there is a plan B. To shake off the sense he is past his sell-by date, Coupe needs to come up with a different song – and fast.

This is a good time for the rugby-loving Kiwi to head for the exit. He still has plenty of credit for turning round the still largely taxpayer-owned bank but is heading off before a brewing row over his lucrative pension arrangements has had the chance to erupt.

RBS was in a terrible state when McEwan arrived in 2013, although the fact that the only way was up for a bank that had come within hours of running out of money in 2008 made his job easier. His predecessor, Stephen Hester, rowed with the then chancellor George Osborne over the direction of the bank, and the RBS brand was toxic.

Much has changed. McEwan has redirected RBS from a bank with overblown global pretensions to a tighter focus on the UK and Ireland. Profits and dividends flow once more and multibillion-pound fines seem to be in the past.

McEwan has sold off assets worth more than 10 Metro Banks, one of the challengers to the high street “big five” that has emerged since the financial crisis. RBS is no longer the biggest bank in the world and all the better for it. Smaller is safer and the focus on the domestic market should – in theory – lead to an increase in funding for the small- and medium-sized businesses that are vital to the health of the economy.

It’s not all been plain sailing. Under McEwan’s leadership, RBS spent billions trying to create a challenger bank, Williams & Glyn, that would never see the light of day. Hundreds of branches have closed, leaving many communities bereft. The scandal over the global restructuring group, which allegedly profited from bankrupting small firms, might have happened before he arrived but the cleanup job on his watch was badly handled.

No question, McEwan leaves RBS in better shape than he found it but the bank remains 62% taxpayer owned and only a supreme optimist would expect the public to ever get its money back. Labour still thinks the bank should be used to direct investment to the economy. The poisoned chalice will be passed onto his successor.